First, we have a quick update on the ongoing British Parliament hearing from yesterday involving Facebook. The hearing went almost along the lines as the US Congressional hearing where Facebook CEO Mark Zuckerberg testified. A number of politicians addressed their concerns with Facebook’s privacy policies and interference by political agitators with Facebook giving little to no information in response. However, according to reports, Parliament may publish the sensitive internal documents that they’ve seized later this week. This could potentially be devastating for Facebook as the documents could show just how complicit Facebook was in allowing the Cambridge Analytica scandal to happen.

Moving on from Facebook, Backpage was back in the news again recently. As you may know, Backpage was responsible for 80% of all online human trafficking in the US by allowing thinly veiled ads for prostitution on their website. Earlier this year, Backpage was seized by the Federal Government and CEO Carl Ferrer pleaded guilty to human trafficking and money laundering charges. One of the last vestiges of Backpage’s existence was that even after their government seizure, Backpage was still incorporated in Delaware as an LLC in good standing and there was little the state government could do to change that. Now, that all seems to be changing.

After passing a state law back in June, Delaware is now able to dissolve certain LLCs with Backpage being one of them. Last week, Delaware State Attorney General Matt Denn asked the Court of Chancery to dissolve the four LLCs that were related to Backpage. AG Denn argues that Backpage abused their “powers, privileges or existence” under state law. This lawsuit was the first one filed after the passing of the new law in June. This has far-reaching implications that affect more than just Backpage as various other shady operations have hidden under Delaware’s lax corporate tax laws. Hopefully, this means that companies like Backpage are no longer welcome in the First State.

Last week, it was reported that Backpage had re-registered as a company in good standing in Delaware even though the company has been seized by the Federal Government. Delaware is known for encouraging corporations to register in their state by offering tax incentives that are both beneficial to the state and the businesses. However, it’s not unheard of for criminal enterprises to register as a Delaware corporation in order to try to hide their illegal activities.

Since the last report came out, the Delaware Attorney General, Matt Denn, has said that his office will seek to have Backpage dissolved as a corporation in Delaware. According to news station WHYY in Wilmington, Denn can do this under a new state law that gives his office the authority to dissolve LLCs that are petitioned to be dissolved. The new law, while promising, reflects that the state isn’t really actively searching for companies abusing the state’s generous corporate tax status. If it wasn’t for WHYY’s reporting and the investigating by a human trafficking support group, the state may not have realized that Backpage was still registered in Delaware.

WHYY also reports that the Attorney General’s office will not appoint an independent counsel to recommend corrections to Delaware law preventing criminal organizations from registering in the first place, or re-registering after they’ve broken the law. While Delaware’s corporate tax breaks may be lucrative for the small state, there definitely needs to be some kind of system in place for holding corporations accountable when they egregiously run afoul of the law like Backpage has.

Earlier this year, I published a blog post about how Backpage was a company in ‘good standing’ in the state of Delaware. Many companies incorporate in Delaware due to their lax tax laws regarding corporations and because Delaware courts have corporate proceedings ruled by a judge knowledgeable in corporate matters rather than a jury which may not be. However, this post was made months before the federal government seized control of Backpage for their alleged role in human trafficking. Now it turns out that Backpage is still a company in good standing in Delaware.

Yesterday, news station WHYY out of Wilmington, published a report that showed Backpage is not only still in good standing in Delaware but also re-registered its status as an LLC. The state Attorney General’s office could potentially revoke Backpage’s but they are still reviewing the legislation that could allow them to do that. Even with a company like Backpage that doesn’t have the most stellar reputation I can imagine the state may drag its feet on any kind of ruling considering it may affect the number of businesses incorporating in Delaware and no one wants to see anything hurt their bottom line.

Backpage isn’t the only shady company that’s been incorporated in Delaware. Again, according to WHYY, Delaware corporations were allegedly used by former Trump campaign chair Paul Manafort to launder money and commit tax fraud, infamous drug lord ‘El Chapo’ allegedly used Delaware to launder his drug money, and former Trump attorney Michael Cohen allegedly used a Delaware corporation to pay hush money to Stormy Daniels. Maybe it’s time for the First State to start paying closer attention to who their granting corporation status too before collecting their money.

The tiny, three county state of Delaware has long been a tax haven for thousands of corporations. Many high-profile companies incorporate in Delaware due to their lax corporate tax laws that allow many of these companies to get out of paying their fair share of taxes to the state where they actually do business. Many of the country’s leading companies are incorporated at the same nondescript office building in Wilmington.

One of the companies that is incorporated in Delaware is Backpage, whose main offices are actually in Dallas, Texas. A number of Delaware government officials are concerned about Backpage’s presence in Delaware but say there’s nothing they can do about it. Even though Backpage is responsible for 80% of all online human trafficking in the U.S., are being investigated by Congress, and have had all major credit card companies refuse to do business with the, Backpage is still considered a company ‘in good standing’ by the state of Delaware.

Both the Delaware Secretary of State and Attorney General say they do not have the legal authority to do anything about Backpage’s standing in Delaware stating they can’t dissolve the company but wish they could. Then maybe it’s time for the legislature of Delaware to give them the legal authority. While a number of companies would probably side with Backpage on this front claiming it starts a dangerous legal precedent, how many of those companies are making their money from the illegal trade of trafficking in human beings? While a company’s main objective is to turn a profit, it shouldn’t be done through the modern-day slave trade.